Wall Street's First Cleanup Man

March 16, 2003

By Mike Brewster

"BY THE WAY..." Pecora's pointed questioning and Mitchell's shell-shocked answers paint a vivid picture of a vastly conflicted National City Bank. Its top officers, each of whom were paid $25,0000 a year, had been getting more than 20 times their salary, based on the volume of securities the investment arm sold. Mitchell himself raked in more than $1 million a year, or 40 times his salary. To keep growing, the investment arm had been pushing securities that its own brokers regarded as vastly overvalued.

Mitchell's personal fate was sealed by this casual question from Pecora: "By the way, that sale of bank stock that you referred to in the latter part of 1929 was made to a member of your family, wasn't it?" Mitchell had sold thousands of shares of National City Bank stock in 1929 at a loss, for tax purposes. Problem was, as he admitted under oath, he had sold them to his wife. Mitchell resigned days later and was arrested on two counts of tax evasion. Though eventually acquitted of the criminal charges by a New York federal court jury, Mitchell a civil court ordered him to pay more than $1.3 million in taxes, penalties, and interest.

President Roosevelt delighted in Pecora's success in the National City Bank case, made it clear that he could continue his investigation